JD.com ( JD ) and Alibaba Group ( BABA ) have a clear road ahead in dominating China’s e-commerce market with Amazon.com ( AMZN ) continuing to be shut out, one analyst says.
Scott Devitt, a Stifel analyst, resumed coverage on JD.com with a buy rating and price target of 48 on U.S.-listed shares. JD.com climbed 4.5% to 40.30 on the stock market today .
“Third-party estimates call for e-commerce sales in China to surpass $1 trillion in 2019 – a 16% compound annual growth rate,” Devitt said in a note to clients.
JD.com is the second-largest e-commerce company in China measured by gross merchandise volume.
“Alibaba and JD.com are both well-managed and well-positioned. The two leaders have effectively shut Amazon out of the e-commerce market in the region. JD.com is the more structured player with controlled logistics,” added Devitt.
IBD’S TAKE:JD.com is up 58% in 2017 but shares have weakened since August. JD.com has a technical buy point of 49.09. Learn more about JD.com and other Chinese internet stocks at IBDStock Checkup .
In October, JD.com and Tencent Holdings ( TCEHY ) expanded their partnership with the launch of a retail marketing platform. JD.com also has an alliance with Wal-Mart ( WMT ), which sold its Chinese e-commerce operation to JD.com last year. Wal-Mart took a stake in JD.com as part of the transaction.
“We expect the primary growth drivers of the China e-commerce market to be improving delivery and payment capabilities, further expansion to rural markets, and a less-developed traditional retail landscape,” added Devitt.
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